UBS Analyst Expects Q2 Beat by Amer Sports

Sentiment on Amer Sports is bullish, according to UBS analyst Jay Sole.

Amer’s CEO James Zheng said during the Finnish firm’s first quarter earnings conference call in May that the company saw growing momentum behind its Salomon sneakers, as well as footwear as the fastest growing category at its Arc’teryx brand.

Sole has a “Buy” rating on shares of Amer Sports, and he’s raised his share price target to $50. Shares currently trade in the range of $37.20.

“Our analyses indicate Amer’s key brands, Arc’teryx and Salomon, have maintained robust sales momentum. As such we forecast a beat and raise report,” the analyst wrote in a report. He expects the company to deliver a second quarter earnings per share (EPS) beat and a slight increase in its Fiscal Year 2025 outlook.

Proprietary data points that include a Google analysis show what Sole calls “broad-based growth” in both Arc’teryx and Salomon searches across the “U.S. and international markets through mid-July on a rolling 3 months, 2-year basis.” The Arc’teryx brand’s U.S. searches rose 61 percent over the period. And industry data showed quarterly acceleration in Salomon’s online traffic growth during the second quarter.

While the analyst sees shares of Amer Sports as a growth stock, he thinks the market is “skeptical” of the firm’s growth potential due to its high leverage to China against the backdrop of a challenging consumer environment and ongoing global macro uncertainty. But with an addressable market opportunity that includes athletic wear and sporting equipment, Sole estimates a $470 billion market-size opportunity in Calendar Year 2023 for the firm that could grow at a 4 percent to 5 percent compound annual growth rate through Fiscal Year 2028 to close to $600 billion.

Tariffs could have a bigger impact on fourth quarter results, particularly with increases in rates across several countries, and Sole expects the company to update the impact from the new duties on imports to the U.S. from Vietnam and other southeast Asian markets in its second quarter conference call on Aug. 19.

The analyst is expecting a higher tariff impact in the fourth quarter because of the timing for when the brand brings products into the U.S. About 60 percent of Amer’s production base is evenly split between Vietnam and China. The fourth quarter also now takes into account the 20 tariff rate for Vietnam, which had been at 10 percent during the temporary pause through Aug. 1. China continues at 30 percent under the current 90-day pause, which on Monday was extended through Nov. 12.

Sole said tariff mitigation strategies will likely include pricing increases, strategic relocation of production to countries with lower tariffs, as well as negotiations with vendors to share additional costs. For the first quarter ended March 31, Amer’s CFO Andrew Page said the impact from higher tariffs were expected to be “negligible” for 2025 due to “mitigation strategies” that were already underway.